Reality Check: Both leaders ignored the public’s economic hardships, but
will the current prime minister pay a political price as well?
By JEFF BARAKTel Aviv protest 311(photo credit: REUTERS/Amir Cohen)
It’s 1992 again. Just as today, the country back then was led by a hardline Likud prime minister whose preferred diplomatic policy was to do nothing, even at the cost of alienating the White House and seriously damaging Israel’s international standing.And just as today, that prime minister was deaf to the social protests enveloping the country. In the end, these protests brought down Yitzhak Shamir’s government and ignited a rare period of hope in Israel’s recent history as Yitzhak Rabin began his second period in office – a term tragically ended by an assassin’s bullet.What did it for Shamir was the feeling that the Likud party he headed was corrupt.Devastating state comptroller reports showed how Likud ministers treated their ministries as personal fiefdoms, hiring people on the basis of political loyalty rather than talent. The election slogan “We’re fed up with corruption” swept the country, and swept Rabin into power.Shamir himself was far from corrupt. Like Menachem Begin before him, and as unlike today’s triumvirate of Binyamin Netanyahu, Avigdor Lieberman and Ehud Barak as it’s possible to be, Shamir led a Spartan life, unimpressed by the trappings of power. After leaving office, there was no move to a luxury apartment for Shamir and his late wife Shulamit, who died this weekend, nor did the former prime minister make any attempt to cash in on his political career and thus boost his bank balance.But Shamir, like Netanyahu, was cut off from the people. As far as he was concerned, as long as his government was building new settlements and refusing to make any diplomatic concessions, problems such as political corruption were minor issues.Shamir paid the political price for placing his rigid ideology above the desires of the general population for a better and fairer day-to-day life, in which talent, as opposed to political cronyism, helped a person advance economically.NETANYAHU TAKES more of an interest in economics than Shamir ever did, but just as Shamir was hostage to his Greater Land of Israel ideology (which Netanyahu shares, despite his occasional remarks for PR purposes regarding “two states for two peoples”), Netanyahu is hostage to his extreme, neoconservative free-market beliefs.Despite creating the most bloated government in Israel’s history (28 ministers!), Netanyahu seeks as small a role for government as possible in terms of running the economy, preferring the private sector over the public whenever the opportunity arises. If this means his rich friends and neighbors in Caesaria get richer at the expense of the tightly squeezed middle class, then so be it.At present, the richest people in Israel pay the least tax. As economic correspondent Meirav Arlosoroff has pointed out, the average income tax rate among Israelis is 20.5 percent.
The upper 1% of salaried workers – the ones grossing NIS 69,000 a month – pay 40% of their income on average.But the uppermost 1% of the selfemployed, grossing NIS 425,000 a month, pay just 26%.This is because these people’s income is mainly derived from assets such as rental income, dividends or interest payments and capital gains, on which the tax rate is appreciably lower than the tax on labor.But our prime minister and übereconomics minister is blind to this screaming inequality.NETANYAHU CAN’T say he wasn’t warned about the bubbling middleclass discontent that has just erupted.Back in February, at the time of the Tahrir Square march of the million in Cairo, Labor MK Isaac Herzog warned of “Rabin Square being filled with citizens fed up with an ever-increasing and illogical burden of expenses that is eroding their income… The middle class is asking itself, ‘What will be left for us, for our children when they get older, their university education and housing?’ The conclusion is clear: The middle class is under attack, and is in a dangerous process of continual erosion.”Unfortunately, unlike 1992, there is no opposition party waiting in the wings with a well-formulated social (and foreign policy) message to take over from the Likud.Kadima’s economic platform is indistinguishable from the Likud’s, and Tzipi Livni (yet again) has shown her total inability to capitalize as opposition leader on the country’s dissatisfaction with Netanyahu. Labor, meanwhile, is an unknown quantity until it sorts out its leadership battle in September. And if it goes for either Amir Peretz or Shelly Yacimovich, it can kiss any hopes it had of regaining its traditional middle- class power base goodbye.Netanyahu, especially with the Knesset now entering its summer recess, will probably ride out this current wave of protests, but come 2012, if the middle class doesn’t feel its lot is improving, we could well see a repeat of 1992 and the country’s rejection of an out-of-touch, hardline Likud leader.The writer is a former editor-in-chief of The Jerusalem Post.
